evolution of mahindra & mahindra

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PROJECT REPORT FOR

MODULE 250

[MANAGING ENVIRONMENTAL INTERFACES]

ON

MAHINDRA & MAHINDRA GROUP

DATE OF SUBMISSION: FEB 9TH2010

Submitted to:Facilitators, M250

Prof. Sanjay Kumar,

Dr. Ashutosh P. Bhupatkar, &

Prof. Ashok Sanghi

Prepared & Submitted by:Puneet Kumar, MBA-II Year

Pearl School of Business


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TABLE OF CONTENTS

ACKNOWLEDGEMENT ................................ ................................ ............... 2

EXECUTIVE SUMMARY................................ ................................ ............... 3Founders ................................ ................................ ................................ ..... 4

ORIGIN OF THE COMPANY................................ ................................ ......... 5Evolving to become an automobile manufacturer ................................ .........6

Invention of the Jeep ................................ ................................ ............... 6Jeep Indian Connection................................ ................................ ............. 7

INDIAN INDUSTRIAL ENVIRONMENT (Post 1947)................................ ........ 8Industrial Policy Resolution................................ ................................ ....... 8License Raj (Second Phase for development of Mahindra Empire) ............... 8Post License Raj (Third Phase)................................ ................................ ...8

M&M TODAY................................ ................................ ............................ 10BIBLOGRAPHY.13


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ACKNOWLEDGEMENT

I would like to share immense gratitude towards my facilitators of this module

for their support and cooperation for the completion of this report.

I want to thank the module coordinator Prof. Sanjay Kumar for designing the

module contents as well as for being the facilitator for one of the course.

I also want to thank Prof. Ashutosh P. Bhupatkar, for his support towards

learning the history of Indian business and helping us understand the

consequences and effects of the British era on our business society. This also

has helped me to understand my subject company, Mahindra and Mahindra,

its history, the challenges and how they came out from those challenges.

Last but the least, I would like to thank Prof. Ashok Sanghi, for making us

understand the vitality of learning current business interfaces for young

professionals like me who are dreaming of becoming future entrepreneurs.


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EXECUTIVE SUMMARY

This study report is based upon my study and preparation for the course

module M250, namely Managing Environment Interface. This module

focuses upon the external environment surrounding Indian business which

covers the government, society, culture and history.

This report is made taking Mahindra and Mahindra group as point of study

for the above stated topics. The company took birth just before Indian

independence therefore it has been deeply impacted by the transformation

the Indian industrial environment has taken after independence.

The development of Mahindra and Mahindra has been described in three

phases:

First phase (from birth to pre License Raj era) Second phase (the License Raj) Third phase (Post License Raj till today)

The post license Raj period has been a boom for M&M. Despite challenges

from inside and outside environment, M&M has overcome its weakness and

leveraged its competency with innovation in its business processes. Now we

can see M&M as one of the top 10 business houses in India and among top 200in the world.


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FoundersMr. J.C. & K.C. Mahindra, the founders of the Mahindra Group, had the same ambition: to

prove to themselves and the world that Indians were capable of being the best at whatever

they chose to do. Accordingly, they gave up their professional careers at TISCO and Martin

Burn respectively, and risked becoming entrepreneurs by setting up their own company:

Mahindra & Mahindra.

It was under their inspiring leadership that Mahindra & Mahindra made the first indigenous

Jeep in the country in 1949. Their innovative spirit also showed during the days when the

Company was the leading importer of steel in the country. J.C. & K.C. Mahindra had to

persuade the Indian Government to buy French rails for the fledgling Indian Railways

because they felt that the British specifications were obsolete and not the best suited. To

convince government officials of the superiority of the French product, they laid down a

short length of rail line with French rails and invited the government authorities for a ride.

During the journey, chilled champagne was served in glasses filled to the brim. Legend has

it that the train raced along, but not a single drop of champagne was spilled, so smooth

were the French rails. Needless to say, they made their point.

Interestingly, J.C. & K.C. Mahindra believed in globalization decades before it had become a

buzzword. Even in the fifties, the Company had British and German engineers on its rolls,

and international tie-ups with Mitsubishi, Willys, Perrine and Chrysler. Every venture they

set up delivered satisfactory financial results and their company, Mahindra & Mahindra, has

grown into one of India's largest corporate groups. Even today the Group is driven by the

same vision that drove them then.


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ORIGIN OF THE COMPANYThe emergence of Mahindra was entirely a post war phenomenon. The scions of a

landholding Khatri family of Ludhiana in Punjab, Kailash Chandra Mahindra and his brother

Jagdish Chandra Mahindra, after completing their education, worked for some time with

two large steel houses. In 1930, however, they left the corporate world to join high

positions in the government. As war was coming close, they also started to think more

openly and decided t launch their own company which would be one of the helping hand to

develop the new India. They believed in the Nehruvian visionwith an infusion of

engineering education and technology, Indians could be second to none.

On October 2nd

, 1945, with that vision in their mind, Mahindra brothers set up a company in

Ludhiana as Mahindra & Mohammed in partnership with a close friend Ghulam

Mohammed. Company was engaged in import of steel, although it also promoted and

acted as managing agents of Machinery Manufacturer Organization (MMC) registered in

Bombay in 1946. A large part of the share capital to MMC was provided by Rana of Nepal

with whom Mahindra brothers had established close contacts.

In August 1946, after getting independence from British rule, the wave of partition

disrupted the plans of brothers. Ghulam Muhammad migrated to Pakistan after breaking

up the partnership. Only two brothers held the ownership and the name of the company

changed to Mahindra and Mahindra.


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Evolving to become an automobile manufacturer

Invention of the Jeep

The first jeep prototype was built for the United States Army Quartermaster Corps (QMC)

by American Bantam in Butler, Pennsylvania, followed by two other competing prototypes

produced by the Ford Motor Company and Willys-Overland.

Production of the Willys MB began in 1941 with 359,851 units were produced before

production stopped at the conclusion of World War II. The origin of the name "Jeep" has

been debated for many years. Some people believe "Jeep" is a phonetic pronunciation of

the abbreviation GP, from "General Purpose", that was used as part of the official Army

nomenclature. The first documented use of the word "Jeep" was as the name of a character

in the Popeye cartoon, known for his supernatural abilities (e.g., to walk up walls). It was

also the name of a small tractor made by Modine before WW2.

Whatever the source, the name stuck and, after the war, Willys filed a trademark claim forthe name.

After war, Willys struggled to find a market for the unusual vehicle, and made an effort to

sell it as an alternative to the farm tractor. Tractors were in short supply having been out of

production during the war. Despite this, sales of the "agri-Jeep" never took off, mainly

because it was too light to provide adequate draft.

However, the CJ-2A was among the first vehicles of any kind to be equipped with four

wheel drive from the factory. It gained popularity among farmers, ranchers, hunters, and

others who needed a lightweight vehicle for use on unimproved roads and trails.

In 1946, a year after the introduction of the CJ-2A, Willys produced the Willys "Jeep" Utility

Wagon based on the same engine and transmission, with clear styling influence from the

CJ-2A Jeep. The next year came a "Jeep" Utility Truck with four wheel drive. In 1948, the

Wagon was available in four wheel drive, making it the ancestor of all Sport Utility Vehicles.


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Jeep Indian Connection

The term Multi-Utility Vehicles owes its origin to the 'General Purpose vehicles' used by

American armies during the World War II. The Willys Jeep was India's first Multi-Utility

Vehicle was launched by Mahindra and Mahindra in 1944 as a franchisee.

Mahindra brothers saw the opportunity at that time.Good infrastructure for transportationwas limited to only metros and majority of areas were served by Kutcharoads (makeshift,

somewhere made of sand, bricks and dust). This was a big challenge in front of government

as well as the industrialists to reach into smaller towns and cities. It was the invention

General Purpose Vehicles by Willys to be used by American Armies during World War II,

which gave the solution. These vehicles were also seen as alternative to farm tractors which

proved its efficiency. Multi-Utility Vehicles are now seen as ideal for the rural roads, and are

highly favored in hilly regions of the country where the terrains tend to be on the rougher

side.


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INDIAN INDUSTRIAL ENVIRONMENT (Post 1947)After independence, there were many problems facing the Indian government. Poverty,

education and unemployment were result of poor and absence of systematic and

coordinated industrial growth and inequality in wealth distribution.

Industrial Policy Resolution

It was the first major step taken by the Indian government for setting directions for the

industrial development of the nation. Government adopted socialistic pattern of governing

and held control of the basic industries. Automobiles were treated as a luxury product and

therefore Mahindra and Mahindra business survived as one of the three automobile makers

in the country.

License Raj (Second Phase for development of Mahindra Empire)

This marks the period between 1960 and 1980 of the industrial development which was

governed by the Permit raj or commonly known License Raj. Government controls and

scarcity of economic development lead to death of innovation in Mahindra business.

The License Raj was a result of governments decision to have a planned economy where all

aspects of the economy are controlled by the state and licenses are given to a select few.

The main purpose of the policy was to make sure that industrial

For existing players, several restrictions were imposed like regulation of number of units to

be manufactured and price of selling. It also restricted companies to develop and expand.

Mahindra and Mahindra was changed dramatically due to enforcement of some of these

restrictions. For example, applications for licenses to make scooters and passenger cars

were all turned down following some regulatory objections raised by the government. Inanother case, Mahindra & Mahindra like many Indian companies was forced to expand into

other businesses, which lead to the creation ofa tractor division in 1982 and a tech division

(which is now Tech Mahindra) in 1986.

Post License Raj (Third Phase)

After the liberalization in 1991, India's overall automobile Industry grew in leaps and

bounds. With the growth in the Indian economy, big international car manufacturers like

General Motors, Ford, Toyota, Honda, Hyundai, Rolls Royce, Bentley and Maybach have

entered the Indian market.

Due to opening of the economy and entry of foreign companies, the early 90s was a period

of turmoil at M&M. Company ran into troubles due to international competition. The

company had to deal with more than one takeover attempt and a major recession and

violent labor unrest. Adding to the situation was the fact that the countrys auto sector was

opened up to global manufacturers. This looked as the decline of the industry as most


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M&M TODAYThe US$ 6.3 billion Mahindra Group is among the top 10 industrial houses in India.

Mahindra & Mahindra is the only Indian company among the top three tractor

manufacturers in the world.. Mahindra is the market leader in multi-utility vehicles in India.

It made a milestone entry into the passenger car segment after having international

collaborations. Now M&M has made an entry in two wheeler segment after acquiring

Kinetic Engineering.

The Group has a leading presence in key sectors of the Indian economy, including the

financial services, trade and logistics, automotive components, information technology,

infrastructure development and After-Market.

With over 65 years of manufacturing experience, the Mahindra Group has built a strong

base in technology, engineering, marketing and distribution which are keys to its evolution

as a customer-centric organization. The Group has several state-of-the-art facilities in India

and overseas.

M&M has entered into partnerships with international companies like Renault SA, France,

and International Truck and Engine Corporation, USA. Forbes has ranked the Mahindra

Group in its Top 200 list of the World's Most Reputable Companies and in the Top 10 list of

Most Reputable Indian companies. Mahindra has recently been honored with the Bombay

Chamber Good Corporate Citizen Award for 2006-07.

Business ofMahindra Group

Automotive Sector

Mahindra Group is the market leader in utility vehicles in India since inception. Mahindra

also manufactures and markets utility vehicles and light commercial vehicles, including

three-wheelers. Some of the famous automobile brands of Mahindra are: Scorpio and

Bolero. Recently, Mahindra joined hands with French automobile major Renault to enter

passenger car segment. It has launched a car called Mahindra Renault Logan and Mahindra

Group's foray into the two-wheeler segment began with the acquisition of the business

assets of Kinetic Motor Company Ltd. (KMCL) extending Mahindra's heritage and pedigree

into the two wheeler space. The Two Wheeler Sector of Mahindra will design and market a

full range of scooters and motorcycles for the Indian market,establishing a robust and end-

to-end two-wheeler business in every segment of the industry. The company has a state-of-the-art manufacturing facility at Pithampur, near Indore in Madhya Pradesh.

Its subsidiary companies engaged in automotive sectors are:

Mahindra Renault Private Limited (MRPL) Mahindra Navistar Automotives Limited (MNAL) Mahindra Navistar Engines Private Limited (MNEPL)


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Farm Equipment Sector

Mahindra is the largest producer oftractors in India and is among the top five tractor

brands in the world. It has its own state-of-the-art plants in India, USA, China and Australia,

and capacity to produce 1,50,000 tractors a year.

Mahindra Gujarat Tractor Mahindra Agribusiness Mahindra Powerol Mahindra USA Mahindra Australia Mahindra China Tractors

Trade & Financial Services

Mahindra Intertrade Limited and its subsidiaries have specialized domain knowledge in

imports and exports of commodities, domestic trading, marketing and distribution

services. Mahindra Finance is one of the largest Non Banking Finance Companiesin India

with an asset base of about Rs. 5000 crores. Mahindra Insurance Brokers offer Life and

Non-life Insurance plans to retail and corporate customers. Mahindra Steel Service Centre

is the first steel service centre in the organised sector in India.

Mahindra & Mahindra Financial Services Ltd (Mahindra Finance) Mahindra Insurance Brokers Ltd.

Mahindra Rural Housing Finance Ltd(MRHFL)

Infrastructure Development

Mahindra Group has interests in real estate, special economic zones, hospitality industry,

infrastructure development, project engineering consultancy and design. Mahindra

Holidays & Resorts is the leader in the lifetime holiday market in India. Mahindra Gesco is

fastest growing Construction Company in India. Mahindra World City is developing and

promoting India's first Integrated Business City. Mahindra Acres Consulting Engineers is a

multidisciplinary engineering consultancy organization.

Mahindra Holidays & Resorts Mahindra Lifespaces Developers Limited Mahindra World City Mahindra Infrastructure Developers Acres Consulting Engineers


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Information Technology

Mahindra Group entered into IT sector in 1986 when it formed a joint venture with British

Telecommunications plc. The company was called Mahindra-British Telecom. The

Company has recently changed its name to Tech Mahindra. Tech Mahindra is a leading

provider of telecommunication solution and service industry world-wide. It is India's 8thlargest software exporter.

TechMahindra Bristlecone

Speciality Businesses

Mahindra Group companies such as Mahindra AshTech, Mahindra Defence, Spares

Business Unit and Mahindra Logistics are into Speciality Businesses. Mahindra AshTech

undertakes turnkey contract execution for Ash Slurry System and Travelling Water Screens.Mahindra Defence Systems looks after the requirements of India's defence and security

forces. Mahindra Logistics provide complete logistics solutions to complex transportation

needs of clients across the world.

Mumbai Mantra Mahindra Defence System

After Market Segment

The After-Market Sector focuses on the vast untapped potential in the after-market space

covering multi-brand pre-owned vehicles, servicing, spares and the financial instrumentsand exchange platforms, which support this business ecosystem. This will create in the

Organized Sector a business ecosystem which mirrors the existing ecosystem for new

vehicles.

Mahindra Spares Business Mahindra First Choice Mahindra First Choice Wheels Ltd.


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BIBLOGRAPHYSources ofInformation

Books:

TheConciseOxford HistoryofIndianBusiness,DwijendraTripathyandJyoti Jumani,OxfordUniversity Press.

Internet:

Company website:o www.mahindra.com

www.wikipedia.org www.business.outlookindia.com www.experiencefestival.com www.automobiles.mapsofindia.com

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